tv Nancy Grace HLN October 30, 2009 3:00am-4:00am EDT
issue of the call as to whether that will also be a subject of an amendment to this bill, as many of our members, if not a majority, are interested in that as well and i yield. mr. hoyer: i think as the previous issue that will be previous issue that will be addressed. funding of abortion, that necessarily goes against those who want to see the pro i had bigs of the government funding of abortion which is why it is
so important that this house take up that issue. i would ask the gentleman, though, if the issues that i raised surrounding the government funding of abortion will be addressed, will those issues be addressed in the manager's amendment or will we expect to be able to address those in an amendment? and i yield. mr. hoyer: i have not discussed specifically the rules committee's plan on that. i will repeat that it will be addressed. how it will be addressed i don't have an answer for. mr. cantor: i thank the gentleman and i thank him for taking note of our concern on that issue. i would also ask -- mr. hoyer: if the gentleman would yield, as you know, that concern is shared on both sides of the aisle. mr. cantor: that is correct and i appreciate the gentleman's comments there. i would ask the gentleman, madam speaker, about the question of the manager's amendment, when we can expect that to be online and
whether the public will have 72 hours to view that amendment prior to any vote and i yield. mr. hoyer: let me ask you, i think you sort of asked the question and i didn't respond to it as to with when we may first consider the bill itself. so let me back up from there. i expect the manager's amendment to be available on monday and i expect there to be 72 hours for the body to have notice of that as well as the general public. i would expect therefore the earliest votes to be no earlier than thursday, 72 hours after the manager's amendment is put online so that would be thursday at some point in time. we will meet that 72-hour close that we have made. mr. cantor: i thank the gentleman. i would finally on this issue of massive bill on health care that we are about to debate next week, i would ask, madam speaker, the gentleman whether
we can expect the doctor reimbursement bill to be included in this bill or whether it will be coming as a separate bill to the floor and i yield. mr. hoyer: as the gentleman knows, the so-called sustainable growth rate which you referred correctly as we sort of refer to it as the compensation -- as the gentleman knows, the senate tried to pass a free standing bill on the sustainable growth rate so that doctors do not receive a 21% decrease on january 1 in their medicare reimbursement rates. on our side of the aisle we are strongly in favor of making sure that cut does not occur. we think that will not serve seniors in particular because medical personnel will be unable to serve with those compensation levels. as a result we very much expect to have a sustainable growth rate bill pass this house.
as the gentleman knows, we've done that in years past. it's not related necessaryly to any other health reform bill, it is an issue in and of itself that relates to existing medicare. the health care reform bill deals with the reform and the creation of a system of affordable, accessible quality health care for all americans. a sustainable growth rate deals with the present system. we've got to deal with it. and i will tell the gentleman, the my intention to make sure that we bring to the floor a sustainable growth rate in discussion with the senate because the senate tried to do it and was not successful passing that. we want to see success. it is absolutely essential that we do that. whether we do health care reform or not, we will do that. so i tell my friend that we're going to have that probably, probably as a free standing piece of legislation.
mr. cantor: i thank the gentleman and i know that as he discussed the senate's experience with that, bill, obviously the question of a deficit is looming large surrounding that issue and i would note that, madam speaker, but in closing -- mr. hoyer: will my friend yield? mr. cantor: i yield. mr. hoyer: i thank my friend for yielding because i did not mention that. we are and as the gentleman knows, i am, very concerned about the looming deficits that have been caused by the very substantial economic downturn and we wish to respond to that under this administration and the previous administration. we need to get a handle on that. one things we have pledged in our budget to do is to make sure that statutory pay-go is put in place which will be a constraint, if you will, a statutory constraint on the spending, whether it's spending in terms of -- on entitlement
spending, whether it's in terms of revenues, or in terms of spending. both have an adverse impact on the deficit. so it is my expectation that when we deal with the statutory pay-go we will also, excuse me, when we deal with the -- either the sustainable growth rate or the estate tax or the a.m.t. or middle class income tax reduction we will include provisions for statutory pay-go to be sent with that legislation to the senate as is consistent with the budget that we passed and the senate passed. mr. cantor: i thank the gentleman and i know that he knows the reported agreement on all of this excludes the items from being fade for -- paid for
which is of concern to him as well as many of us when we're considering the health bill and choose to leave out a significant portion of government expense under medicare in terms of reimbursing providers under the s.g.r. i yield. mr. hoyer: let me ask my friend just so that i can know as we move forward, if we do not consider the health informed bill, is the gentleman in favor of moving a reimbursement for doctors provision, notwithstanding that? mr. cantor: i think the gentleman knows that i as well as most of my colleagues, madam speaker, will be supportive of trying to address the inequities that exist in the current s.g.r. formula and he has my commitment to want to work to try and fix and right those inequities, then the payment formulas that have been established are far from matching the realities of
practice expense for our physicians. mr. hoyer: i thank the gentleman and look forward to his help. mr. cantor: i thank the gentleman for that. in closing, madam speaker, you know, after we've had this discussion and the colloquy and the gentleman's words a well as mine, for some time now, i would just note for the gentleman as well as our colleagues that 41% of the american people, according to a recent gallup poll, think the economy should be our top priority. while only 17% think that health care should be congress' top priority. in addition to that, madam speaker, there was a haulout by a democratic pollster in which was cited that 81% of americans do not think that the majority -- do not think that democrats -- are doing enough to address the disappearing jobs in our economy.
so, madam speaker, i close with that, i thank the gentleman very much -- mr. hoyer: before you close, will you yield on that issue? mr. cantor: i yield. mr. hoyer: i thank the gentleman for yielding. those were interesting polls. did the gentleman miss the portion of the poll that reflected which party the american public trusted more to deal with either one of those issues? i didn't hear you say it. i happen to have seen those polls and happen to have seen those numbers and i wondered if the gentleman had seen those numbers? mr. cantor: in closing, madam speaker, i would respond to the gentleman by saying i don't think neither he nor i are proud of what the public views as the performance of this body as a
the hearing will convene. i apologize, because i was delay ad few minutes and i regret that. we will have ten minutes on each side for opening statements, and the gentleman from illinois is recognized for three minutes. >> thank you, mr. chairman. first of all, i'd like to thank the secretary for coming here today, and while i support most of the legislation, do i have apprehensions about the way we propose to create a fund to pay for the costs associated with the resolution of a failed systematically significant financialin tu institution. it seems to me that behavior
that was reckless in the past has generated huge profits and gains and allowed the wall street executives to line their pockets with hundreds of millions of dollars if not become billionaires in the process. that that greed should it ever, that avarice ever gain its ugly head once again, there should be an insurance fund paid for them, and these are good times. we read all about how good the wall street giants are doing once again, and how their profitability is there. well, they should set aside some of that money. most of us don't die and then buy a life insurance policy. most of us say, in case something happens to luis, let me make sure if i owe people money and if i have responsibilities that i leave my family and all of those that i have a responsibility, that i set aside some money and buy some insurance. be wonderful that one day, i
just wake up cold and that all of my debtors and everybody say, oh, let's go take a life insurance out on luis. that is not the way it works and wall street has to learn -- because i read in the paper this morning, mr. secretary, there are a few of them complain, and record profits on wall street, and they are complaining that the congress of the united states might require them to set aside some of those billions of dollars in earnings so that in the eventual waieventualitie th risky and fail, that they have to set aside money. no more american taxpayer money should be set aside in case we see the tragedy and the failure we have seen in the last couple of years. so my basic premise today is, look, they were greedy. they should pay for future
insurance policy payouts, and the funds should be set up just in case their behavior and reckless and dangerous and risky behavior raises the ugly head again and i look forward to not only today, but to the process of designing legislation that makes sure that those systematically risky institutions are paying into a fund now today, not after the fact. thank you very much, mr. chairman. >> the gentleman from alabama is recognized for five minutes. >> mr. chairman, as you know from the letter you received from the house financial services republicans yesterday, the process for considering the most far-reaching significant reforms of our financial system since the great depression should be deliberative and not hurried. the draft legislation that is supposed to be the subject of this hearing was not received until tuesday afternoon. do it if any of today's witnesses with the possible exception of secretary geithner
have had the opportunity to look at the legislation in its entirety or be informed dunl ter merits. dunl ter rules of the committee, the witness's written testimony was due two days before the hearing and which is to say that it was due before the draft bill was released and the written testimony therefore cannot and does not a address in any meengful way the legislation we are now marking up this morning. or marking up early next week. although we have, we have had the draft bill for less than 48 hours, even a cursory reading shows that the administration has chosen to continue its failed policies of forced bailouts and orchestrated behind closed doors by officials at the treasury and the reserve. the democrats' talking points that the new proposal ends the era of i quote too big to fail
is just that, talk. the taxpayers are first if line to bear the losses when the government invokes its resolution authority, and for those who believe that those taxpayer losses will be subsequently recouped from the surviving firms i direct their attention to the recent examples of gm, chrysler, fannie mae and freddie mac and aig and even more recent example of gmac where the prospects of full taxpayer reimbursement are fanciful. this committee's haste -- sorry. in fact, in testimony before this committee last month former federal reserve chairman paul volcker warned that a resolution authority with the power to lend or to provide money would encourage the too big to fail syndrome, although he advised the obama administration that his caution has been rejected in the draft. in in a attempt to avoid naming
the institutions that deems too big to fail, the administration's legislative proposal foregoes the transparency and full disclosure that are the hallmark of america's capital markets. in the place of an open process, it substitutes a regulatory regime built around a secret list of too big to fail institutions. it is foolish to assume that such a list will be kept secret. are we so gullible as to believe that the regulatory authorities for eight government agencies will be able to impose increased capital requirements and a host of other regulatory constraints on the so-called identified firms without market participants quickly figuring out which firms are on the list? are companies expected to treat this information as immaterial for purposes of filing reports with the s.e.c.? until these questions are answered, it is simply
irresponsible for this committee to accept such a foundational premise and move forward with this legislation. the administration's desire to get something, anything done to satisfy some arbitrarily, arbitrary deadline impose odd n en -- imposed on the chairman will result in this committee passing a product that has not received the careful deliberation necessary to ensure sound legislation. mr. chairman, is it too much to ask the members of this committee and the people they represent that they have enough time to read and understand the far-reaching implications of this legislation? in conclusion, this committee's haste also stands in marked contrast to the views expressed by federal reserve vice chairman donald cohen who said, i hope we build a regulatory structure that is good for a couple of decades and it is worth taking our time to get it right. the economy is fragile and we
learned this morning that it continues to lose jobs. we need to promote job creation and growth and not more uncertainty. i share chairman cohen's hope that we fulfill our obligation to do this in a deliberative manner and not the haste that we are witnessing this morning. i yield back the balance of my time. >> the gentleman from pennsylvania is recognized for two minutes. >> thank you, mr. chairman. mr. chairman, i understand that we are under pressure to get some things done, and unfortunately, we haven't had a great deal of time to spend in analyzing this proposition. i wanted to address my remarks simply to the secretary that in his presentation can help us out. i discern that there is a great interest in america for us to have this type of a power at the federal level to prevent future disasters of the kind that we experienced within the last year, but i also feel that the american people are speaking to
our system was so great that we have to use the interstate commerce clause to create tremendous executive authority without much restraint -- i just read mr. chairman's letter and he makes good points. if we are having that transfer of authority, it seems to me the obligation of treasury to come forward to prevent this so it does not happen again in the future by curtailing and tailoring down the size of the institutions and particularly the financial institutions of this country so that we cannot have systemic problems. >> the gentleman's time has expired. i want to do to a couple on the republican side. the gentleman from texas, mr. neugebauer. >> i thank you for the work on the new draft. while you have address some of
the concern in prior proposals the overall concept not changed much. this draft will allow regulators to identify firms who are too big the fail, and although those firms will now be kept secret. this version still keeps the government in the bailout business while a line of credit for the taxpayers will be used that may or may not be paid back. these are non-starters. rather than a government arbitrary resolution, we need a strong banking regulation to hold them to the law. rather than picking winners doo council should require regulators to look at risks and review capital requirements to ensure all firms are holding the needy capital for the roles they are taking. we need a reform plan that puts the taxpayers and economies first rather than making bailouts permanent. like the ranking member, i think this process needs to be slowed down some because these are
probably some of the more important things that we'll do on this committee in the next few months, and we need to get it right. i yield back. >> the gentleman from california, mr. royce. >> thank you, mr. chairman. apparently the too big to fail mod cell too hard to kill. i thought we would have learned our lesson from fannie and freddie. prior to their failure it was widely perceived the government would thereby to bail them out when they ran into trouble. that implicit guarantee translated into real advantages for the gses in terms of lower cost of capital which facilitated their dominance in the marketplace. the assistant backstop already provided to the largest of our financial institutions is having an eerily similar effect. a recent study by the study of economic and policy research found that the too big to fail doctrine translated into a tangible subsidy for the 18 largest bank holding companies worth $34 billion per year with
a 78 basis points lower of capital when compared to smaller competitors. instead of granting permanent bailout authority and institutionalizing the too big to fail doctrine, which this legislation does, we should set up a structure that will allow for an orderly liquidation of an institution through an enhanced bankruptcy without the use of government funds. >> and the jept gentleman from illinois. >> thank you. my initial review of the chairman and secretary's financial stability plan is that it would do the complete opposite. create further financial instability and facilitate risky behavior in financial firms. while the headlines have said a deal has been reached, i would argue this is no deal for the american people and especially the taxpayers. while i support a strong council of regulators, including federal and state regulators at the table and stronger, smarter regulation, i don't think the resolution authority under this
proposal is the right answer. it's my hope instead of supporting more proposals to increase the power of the federal government the administration will strongly consider a new chapter to the bankruptcy code. it's my hope we can also consider proposals addressing two of the biggest financial failures of our time. fannie mae and freddie mac. never again can we allow regulators to fall asleep at the wheel or another bailout or the government picking winners and losers of private businesses. i yield back. >> i will yield myself five minutes. we are in a difficult situation. history is apparently been somewhat rewritten. all the bailouts that the gentleman from alabama referred to, where we are not going to get money back, were the result of an absence of policies to deal with this set of situations. and every one of those bailouts was requested by the bush administration by secretary paulson and chairman bernanke.
now as of april 2008, secretary paulson said we need to do some things to keep this from happening. it happened very quickly, and we were unable to avoid those. the question of simply allowing bankruptcy to be the way to deal with it, there's nothing theoretical about that. that's the lehman brothers situation. lehman brothers went bankrupt and the bush administration officials had two responses. first, to use federal reserve authority without any congressional approval, and even prior notification to begin the process of providing funds to pay off the creditors of aig. that was done by the federal reserve last september under the bush administration with no congressional involvement other than to be told after the fact. secondly, they came and asked us for authority to spend some money to provide some forms of cash so other institutions
didn't go under. congress agreed with some conditions. i think it avoided worse dangers that could have been administered better. our whole purpose is to change that situation and to prevent it. yes it is true we had these previous problems. that's because we didn't have any set of rules. what we do today is to begin deliberation on a proposal that does a couple -- now there are two problems that were raised with regard to the bailouts. one, the use of taxpayer money. and this is a set of proposals that will prevent taxpayer money from being used. members say, oh, this requirement that it come from the financial industry, that won't work. congress will do it instead. they have a very different congress in mind than the one i have served in. i do not believe there's any remote chance that congress would come to the rescue of the financial industry as this bill will have required and set aside substitute taxpayer money.
if that's their intention, they can try but i feel they'll be outvoted. there's the moral hazard. the argument that once people know certain institutions are of a certain size they'll be protected. that's why many of us rejected the notion there be a list published beforehand. what we have here is this. a group of regulators that will be monitoring institutional behavior, both cumulative institutional behavior like subprime loans and the behavior of a large irresponsible institution like aig. there will be no notification to the public or privately that a particular institution is in that category without simultaneous restrictions on the institution. there will be no prior notification so the institution will then be free to attract investment because it will be shown to be so big. it will become manifested. this institution is covered. the day that the regulator says you must significantly increase your capital, you must reduce
your activity, we will be adding to this. it's in here. and the ability to take the kind of restrictions that exist that under glass/steagall nationwide and impose them institution by institution. so there is a threshold quest n question. is it possible to go forward in this situation without any funds ever being used to prevent the kind of cataclysm of failure leading to failure leading to failure that the bush administration felt very much we had to avoid. we, i think, minimize this in a couple of ways. first of all, the penalty for being such an institution will be very severe. there will be death panels enacted by congress this year, i hope, but they will be for those large institutions who are to be put out of business, whose shareholders will be wiped out and executives fired, whose boards of directors will be replaced. there will also be no guarantee in any case that the creditors are going to receive 100 cents
on the dollar. classes of creditors will be allowed to be exempted entirely from any repayment. other creditors will have it reduced. you can't do that under bankruptcy. general bankruptcy makes it harder to have that kind of thoughtful selection. we're using the constitutional power of bankruptcy but a way that's more thoughtful. final lirks would say this. this is not the only place. i hope we will be imposing some restrictions on your ability to secure ties 100% of the loan. we are doing other things. we are requiring other people to register. there will be other restrictions that will keep us from getting to that situation. now i recognize the gentleman from texas, mr. hensley for one minute. >> thank you mr. chairman. i find it somewhat curious that we're having a hearing on systemic regulation and nowhere do i see the director of fhfa, the regulator of fannie and freddie. the same fannie and freddie that were compelled to buy the lion's share of poorly underwritten loans in this nation, the same
fannie and freddie that have now cost the taxpayer over $1 trillion. the administration has now submitted to us legislation to regulate pawn shops and grocery stores, but no legislation deal with the greatest systemic risk within the system fannie and freddie. the bill we're considering today will simply institutionalize too big to fail, paving the way for more fannies and freddies and perpetual taxpayer bailouts. according to "the wall street journal," the administration is not done with taxpayer funded bailouts as apparently gmac is now in for their third multibillion-dollar bailout. to borrow from a title of a song by the commodores, once, twice, three times a bailout, enough is enough. i yield back. >> mr. garrett for one minute. >> mr. chairman iseek unanimous consent to enter into the record the statement by congressman brad sherman regarding let's not adapt t.a.r.p. on steroids and
an appropriate analysis of exactly what this legislation stands for. >> without objection means you can do it. >> secondly iwish to enter into the record the congress -- into this record the congressional record from the day in which the t.a.r.p. legislation was passed this house of congress and indicate in that day of the congressional record that the chairman was the manager of that legislation as it passed through a democrat congress. without objection? >> without objection. >> there you go. thank you. mr. chairman, do i begin my time now? >> start the minute now. >> thank you. mr. chairman, i find this legislation draft proposal which is a continuation of bailout legislation absolutely incredible. the last several months it was my impression that there was a developing consensus the federal reserve should be given less power, not more. in reading over this discussion draft in the very limited time we've had to review this most important legislation this committee will probably ever
consider in our lifetimes, i'm struck by how much power the fed has given. although it's not singled out as a sis stemmic uber rater in name. this fed is given primary supervision or systemic firms and can override lesser regulators that don't comply with its wishes. the fed is given almost unlimited thort systemically dismantle a private company. this is a lot more than impotion capital standards. i for one given the extraordinary government intervention into private firms we've already seen with the trampling of the rule of law in order to benefit some political favorites in the auto industry, for instance, i'm very uncomfortable with this sweeping unchecked power. >> the gentleman's time has expired. >> they failed to effectively mitigate many of the large bank holding companies already under its purview. thank you. >> the secretary of the treasury is now recognized for his statement. >> thank you, mr. chairman. pleasure to be here again. i want to begin with a few comments on the economy.
today we learned our economy is growing again. in the third quarter of this year, the economy grew at an annual rate 36.5%. the first time we've seen positive growth in a year. the strongest growth in two years. business and consumer confidence has improved substantially since the end of last year. house prices are rising, the value of american savings have increased substantially. americans are now saving more and we are borrowing much less from the rest of the world. consumers are just starting to spend again. businesses are starting to see orders increase. exports are expanding. and these improvements are the direct result of the tax cuts and investments that were part of the recovery act and the actions we've taken to stabilize the financial system and unfreeze credit markets. but this is just the beginning. unemployment remains unacceptably high for every person out of work, for every family facing foreclosure, for every small business facing a credit crunch, the recession remains alive and